CORPORATE GOVERNANCE AND BANK PROFITABILITY: A FIXED EFFECTS REGRESSION ANALYSIS OF STATE-OWNED BANKS IN UZBEKISTAN
Keywords:
Uzbekistan, Corporate Governance Reforms, Financial Performance, State-Owned Banks.Abstract
The structural transformation of Uzbekistan’s banking sector highlights the need to evaluate the outcomes of corporate governance reforms. This study explores how recent reforms impact the profitability of state-owned banks in Uzbekistan. Utilizing panel data analysis with a Fixed Effects model and Bootstrapping techniques, the research investigates the relationship between governance variables—such as board composition, board size, gender diversity, audit and risk committee size, and government ownership—and profitability indicators, including Return on Assets (ROA) and Return on Equity (ROE). The results indicate that while government ownership enhances financial stability, larger audit committees may reduce efficiency. These findings offer valuable insights for policymakers in emerging markets, emphasizing the importance of aligning governance practices with local economic and institutional conditions
References
Abhisheck Kumar Singhania and Nagari Mohan Panda. (2023). Does an Effective Audit Committee Influence Firm performance? –The Moderation Role of Knowledge Intensity. Corporate Governance, 24 (4). Available from https://doi.org/10.1108/cg-03-2023-0123.
Adams, R. B., & Mehran, H. (2012). Bank board structure and performance: Evidence for large bank holding companies. Journal of Financial Intermediation, 21(2), 243-267.
Affes, W. and Jarboui, A. (2023). The impact of corporate governance on financial performance: a cross-sector study. The impact of corporate governance on financial performance: a cross-sector study, 20, 374–394. Available from https://doi.org/10.1057/s41310-023-00182-8.
Ahmed, Z., Hussin, M.R.A. and Pirzada, K. (2022),“The impact of intellectual capital and ownership structure on firm performance”, Journal of Risk and Financial Management, Vol. 15 No. 12, pp. 1-15.
Al-Janadi, Y., Abdul Rahman, R. and Alazzani, A. (2016), “Does government ownership affect corporate governance and corporate disclosure? Evidence from Saudi Arabia”, Managerial Auditing Journal, Vol. 31 Nos 8/9, pp. 871-890.
Al-Malkawi, H.A.N. and Pillai, R. (2018), “Analyzing financial performance by integrating conventional governance mechanisms into the GCC Islamic banking framework”, Managerial Finance, Vol. 44 No. 5, pp. 604-623.
Banda, M. and Mwange, A. (2023). Corporate Governance: a Theoretical Review. European Journal of Business and Management, 15 (16), 60–70. Available from https://www.iiste.org/Journals/index.php/EJBM/article/view/61616.
Boshnak, H.A. (2023), "Ownership structure and firm performance: evidence from Saudi Arabia", Journal of Financial Reporting and Accounting, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JFRA-11-2022-0422
DeZoort, F.T., Hermanson, D.R., Archambeault, D.S. and Reed, S.A. (2002), “Audit committee effectiveness: a synthesis of the empirical audit committee literature”, Accounting Literature, Vol. 21, pp. 38-75.
Dubko, S. (2023). Key Trends in the Banking Sector. German-economic-team.com. Available from https://www.german-economic-team.com/en/newsletter/key-trends-in-the-banking-sector/ [Accessed 5 October 2024].
EBRD. (2023). A Resilient Financial and Banking Sector . EBRD. Available from https://www.ebrd.com/documents/country-offices/resilient-financial-and-banking-sector-in-uzbekistan.pdf [Accessed 5 October 2024].
Iwasaki, I., Ma, X. and Mizobata, S. (2022), “Ownership structure and firm performance in emerging markets: a comparative meta-analysis of east european EU member states, russia and China”, Economic Systems, Vol. 46 No. 2.
Jiang, L. and Ji, M. (2023). Risk Management Committee and Bank performance: Evidence from the Adoption of the Dodd–Frank Act. Journal of Business Finance & Accounting. Available from https://doi.org/10.1111/jbfa.12765 [Accessed 22 August 2024].
Karim, S., Vigne, S.A., Lucey, B.M. and Naeem, M.A. (2024), "Discretionary impacts of the risk management committee attributes on firm performance: do board size matter?", International Journal of Emerging Markets, Vol. 19 No. 8, pp. 2222-2240. https://doi.org/10.1108/IJOEM-05-2022-0782
Khan, M. H., Fraz, A., Hassan, A., & Abedifar, P. (2020). Female board representation, risk-taking and performance: Evidence from dual banking systems. Finance Research Letters, 37(April), 1–13. doi:10.1016/j.frl.2020.101541
Lex.uz (2022). Resolution of the President dated March 18, 2022, №PP-168. Additional measures to expedite the speed up of the privatization process. Available from https://lex.uz/en/docs/5918985
Lex.uz (2022). Resolution of the President dated May 15, 2020, №UP-5998. The banking sector reform strategy 2020-2025. Available from https://lex.uz/ru/docs/4811037
Maniruzzaman, M. et al. (2024). Impact of Corporate Governance Norms on Bank Financial Performance in Bangladesh. Zenodo, 11 (8). Available from https://doi.org/10.5281/zenodo.13323439 [Accessed 5 October 2024].
Miller, J. L. (2002). The Board as a Monitor of Organizational Activity: The Applicability of Agency Theory to Nonprofit Boards. Nonprofit Management and Leadership, 12(4), 429–450. https://doi.org/10.1002/nml.12407
Mirpulatova L. Improving the corporate governance system in commercial banks of Uzbekistan using digital technologies based on international principles. file:///C:/Users/User/Downloads/714-Article%20Text-1108-1-10-20231004.pdf
Mirziyoev Sh.. M. Decree of the President of the Republic of Uzbekistan dated January 09, 2018 No.5296 "On measures to radically improve the activities of the Central Bank of the Republic of Uzbekistan"
Mirziyoev Sh.. M. Decree of the President of the Republic of Uzbekistan on “Strategy for reforming the banking system of the Republic of Uzbekistan in 2020–2025”. No. UP5992 dated 12 May 2020.
Musah, A., Adjei, E., Akomeah, E., & Ahmed, I. A. (2019). Corporate governance, gender diversity and bank performance: evidence from Ghana. Indonesian Journal of Corporate Governance and Social Responsibility, 1(1).
Musallam, S.R. (2020), “Effects of board characteristics, audit committee and risk management on corporate performance: evidence from Palestinian listed companies”, International Journal of Islamic and Middle Eastern Finance and Management, Vol. 13 No. 4, pp. 691-706, doi: 10.1108/ imefm-12-2017-0347.
Musallam, S.R.M. (2018), “The direct and indirect effect of the existence of risk management on the relationship between audit committee and corporate social responsibility disclosure”, Benchmarking: An International Journal, Vol. 25 No. 9, pp. 4125-4138.
Pearce, J. and Zahra, S. (1992), “Board composition from a strategic contingency perspective”, Journal of Management Studies, Vol. 29 No. 4, pp. 411-438.
Sanda, A.U., Mikailu, A.S. and Garba, T. (2010). Corporate governance mechanisms and firms’ financial performance in Nigeria. Afro-Asian J. of Finance and Accounting, 2 (1), 22. Available from https://doi.org/10.1504/aajfa.2010.035193.
Subramaniam, N., McManus, L. and Zhang, J. (2009), “Corporate governance, firm characteristics and risk management committee formation in Australian companies”, Managerial Auditing Journal, Vol. 24 No. 4, pp. 316-339.
Temirov A. Ways to improve Corporate Governance in Commercial Banks ofthe Republic of Uzbekistan. https://tsue.scienceweb.uz/index.php/archive/article.2020.
Umar, A., Sudradjat and Etti Ernita Sembiring. (2023). Board characteristics, state ownership, and corporate social responsibility: Evidence from Indonesian Islamic banks. Cogent economics & finance, 11 (2). Available from https://doi.org/10.1080/23322039.2023.2266323.
Umarkhojaeva M. Features of corporate governance in commercial banks the republic of Uzbekistan. https://journal.tsue.uz/index.php/archive/article.2022
Downloads
Published
Issue
Section
License
Copyright (c) 2025 Yusufjon Pulatov, Bakhtiyor Islamov (Author)
This work is licensed under a Creative Commons Attribution 4.0 International License.